Narrower-Than-Expected Loss at Incyte
Incyte Corporation (INCY) reported a loss of 12 cents per share in the first quarter of 2013, narrower than the loss of 13 cents hinted by the Zacks Consensus Estimate. The company’s first quarter 2013 loss was also narrower than the year-ago loss of 36 cents per share. The narrower loss during the period was attributed to higher revenues.
Quarter in Detail
Total revenues in the reported quarter jumped to $71.1 million from $36.2 million in the year-ago quarter. Revenues were boosted by the increase in Jakafi sales. Jakafi, Incyte’s sole marketed product, was launched in the US in Nov 2011, for treating patients suffering from intermediate or high-risk myelofibrosis (MFGLQ). Revenues were however short of the Zacks Consensus Estimate of $80 million.
Total revenues comprised net product revenues, royalty revenues, contract revenues and others.
Incyte recorded net product revenues of approximately $48.3 million from Jakafi sales in the first quarter of 2013. The company recorded $19.3 million as net product sales of Jakafi in the year-ago period. Revenues from the drug were up 11.5% sequentially.
Incyte has a collaborative agreement with Novartis (NVS) to market Jakafi outside the US. The drug is also approved by the European Commission to treat adults suffering from primary MF, post-polycythemia vera MF or post-essential thrombocythemia MF.
We note that Jakafi is being studied for additional indications as well. Novartis is currently evaluating Jakafi in two phase III clinical trials (RESPONSE and RELIEF), for the treatment of patients suffering from polycythemia vera (:PV). The company intends to submit a supplemental new drug application for Jakafi in the PV indication in the first half of 2014.
Jakafi is also being evaluated in a phase II trial in combination with Roche Holding’s (RHHBY) Xeloda for the treatment of refractory metastatic pancreatic cancer. Final results from the study are expected in the latter half of this year.
Incyte’s product royalty revenues came in at $5.9 million during the reported quarter. Contract revenues remained flat at $16.7 million during the quarter. Other revenues were $142,000, down 12.9% from the year-ago quarter.
Both research and development (R&D) expenses (up 7.8% to $52.8 million) and selling, general and administrative (SG&A) expenses (up 4.0% to $22.3 million) climbed during the quarter. Incyte’s efforts to develop its pipeline were primarily responsible for the rise in R&D expenses in the first quarter of 2013. Higher costs related to the marketing of Jakafi were primarily responsible for pushing the SG&A costs up.
2013 Outlook
Incyte maintained its revenue guidance for 2013. The company still expects to generate total revenues from net product sales of Jakafi in the range of $210–$225 million in 2013. The net sales guidance excludes any product royalty revenues received from Novartis on sales of Jakavi.
We are encouraged by the strong Jakafi sales during the first quarter of 2013. Incyte also has a robust pipeline. Successful development and commercialization of these candidates should drive growth at the company.
Incyte, a biopharma company, currently carries a Zacks Rank #2 (Buy). Other biopharma stocks such as Medivation Inc. (MDVN) also carry a comparable rank.
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